Cambridge debacle may lead to inquiry

Parliament's public spending watchdog may investigate financial controls and governance at Cambridge University.

The National Audit Office has already been in correspondence with Cambridge over "long-standing accountability problems" that could form the basis of a study, a senior NAO source said.

Cambridge is already under scrutiny from the Higher Education Funding Council for England. The NAO's concerns were increased after the publication of a damning internal report into the university's bungled implementation last year of the £9 million Capsa accounting system.

A report on Capsa published last week by Institute of Education visiting professor Michael Shattock, suggests that public money may not be safe at the university. The report says that the introduction of the system was an "unmitigated disaster", characterised by moments of "high farce", "hard-to-credit naivete" and "fallacious" financial reports. The costs of introduction spiralled from £4.72 million to nearly £9 million and the system is still not working properly.

The finance department was "chronically understaffed" and had been "decimated" by early retirements and resignations, Professor Shattock found. The procurement of external consultants was done without proper competition and gave rise to a conflict of interest. Repeated warnings about problems were largely ignored.

The report claims that Cambridge's governance structures made it "impossible" to identify who was responsible.

Professor Shattock concludes: "For the situation to be rectified, a significant investment in qualified staff needs urgently to be undertaken. If this is not done, Cambridge will not be able to meet its national and international obligations to account for the funds made available to it."

Professor Shattock points out that the university's obligation under its funding agreement with Hefce is to ensure that "it has a sound system of internal financial management and control".

Sir Alec Broers, vice-chancellor, said he "regretted" the Capsa debacle but said moves were under way to rectify problems. New staff, including a director of finance, had been brought in and there were plans for a new tier of professional administrators and several new pro vice-chancellors.

He said: "We are audited by Hefce. They carried out their audit and we have internal and external auditors. All our money has been safeguarded."

Professor Shattock's report also raises serious criticisms of Cambridge's governance in general. "The Capsa story illustrates the problems that arise when responsibility is diffused between committees and among different officers," it says.

"The university needs to find a way to retain its tradition of academic self-government while preventing it a lapse into cosiness. It needs to inject into its governance a set of more rigorous and self-critical attitudes."

The NAO will monitor progress at Cambridge and hopes it will sort itself out and avoid the necessity for investigation.